The rupee depreciated 25 paise to close at 94.47 (provisional) against the U.S. dollar on Friday (May 8, 2026), after rising in the past two sessions, on renewed tensions between the U.S. and Iran over the Strait of Hormuz.

Forex traders said investor sentiments were affected after Iran accused the U.S. of violating the ceasefire as the U.S. carried out fresh attacks in the Strait of Hormuz and civilian areas, while President Donald Trump said the ceasefire was still in effect.

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Brent oil prices, which had fallen to $98 per barrel amid the U.S.-Iran peace deal, edged higher to around $100 per barrel as investors weighed the prospects for a West Asia peace deal.

At the interbank foreign exchange market, the rupee opened at 94.58 against the U.S. dollar, then lost momentum and touched 94.68 against the American currency, registering a fall of 46 paise over its previous close.

At the end of closing on Friday (May 8), the rupee was quoted at 94.47 (provisional), down 25 paise over its previous close.

On Thursday, the rupee pared initial losses and settled the day on a positive note, up 27 paise at 94.22 against the greenback. Forex traders said risk aversion in global markets and weak domestic equities also weighed on the rupee.

"We expect the rupee to trade with a slight negative bias amid renewed geopolitical tensions in the West Asia war. Recovery in crude oil prices and weak global markets may also pressurise the rupee.

"FII outflows may further drag the rupee lower. However, we do not expect any major aggression. Traders may also take cues from U.S. non-farm payrolls data. USD-INR spot price is expected to trade in a range of 94.10 to 94.90," Anuj Choudhary, Research analyst at Mirae Asset ShareKhan.

On Friday (May 8), the United Arab Emirates responded to a missile and drone attack hours after the U.S. said it thwarted attacks on three Navy ships in the Strait of Hormuz.

Iranian state media said the country's forces exchanged fire with "the enemy" on Qeshm Island in the Strait of Hormuz. It also reported loud noises and continuous defensive fire in western Tehran late Thursday night (April 8).

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 97.91, down 0.15%. Brent crude, the global oil benchmark, was trading lower by 0.25% at $99.81 per barrel in futures trade.

On the domestic equity market front, Sensex fell 516.33 points to settle at 77,328.19, while the Nifty dropped 150.50 points to 24,176.15. Foreign Institutional Investors offloaded equities worth ₹340.89 crore on Thursday (May 7), according to exchange data.